Route Change Forces Keystone Foes to Shift Focus

Workers move a section of pipe during construction of the Gulf Coast Project pipeline in Atoka, Oklahoma. The Gulf Coast Project, a 485-mile crude oil pipeline being constructed by TransCanada Corp., is part of the Keystone XL Pipeline Project and will run from Cushing, Oklahoma to Nederland, Texas. Photographer: Daniel Acker/Bloomberg

April 17 (Bloomberg) -- Opponents of the Keystone XL
pipeline used to have a simple argument: the project would
endanger Nebraska’s delicate Sand Hills region, a vast network
of dunes and wetlands that have been designated a National
Natural Landmark.

State leaders, including Republican Governor David
Heineman, opposed the project on those grounds. President Barack
Obama cited the threat to water in the state before denying
TransCanada Corp. a permit last year to build the pipeline,
which would carry Canadian tar sands oil to refineries on the
U.S. Gulf Coast.

Then TransCanada offered a new route that largely avoids
the Sand Hills and won the support of Heineman. While oil spills
remain a concern, environmental groups opposed to the pipeline
have shifted their emphasis to the more complex charge that
mining Canadian tar sands will result in more greenhouse gases
and exacerbate global warming.

“The initial opposition was framed heavily in terms of its
impact on water and the risks to the aquifer,” Phil Sharp, a
former Democratic House member from Indiana and president of
Resources for the Future, a Washington-based research group,
said in an interview. “They kind of downplayed the greenhouse
gas issue. Now I think they’re coming up short in the public
argument because there either isn’t the public foundation on
this issue or the same intensity of interest.”

Bill Approved

Lobbying on both sides of the debate has picked up in
advance of a decision expected in coming months from the U.S.
State Department, which has jurisdiction over the $5.3 billion
project because it would cross an international border. The
agency scheduled a hearing for tomorrow in Nebraska where
opponents and supporters are expected to appear.

Last month, 17 Democrats joined every Senate Republican in
support of a non-binding resolution endorsing Keystone XL. The
House Energy and Commerce Committee today voted 30-18 to approve
and send to the full House a bill sponsored by Representative
Lee Terry, a Nebraska Republican, that would allow the pipeline
to be built without the administration’s approval. Obama has
said he would veto the measure.

Yesterday, groups fighting Keystone released research they
said showed it would increase greenhouse-gas emissions by 181
million metric tons. That is equal to the emissions from 46 coal
plants and 34 million vehicles, under estimates used by the
Environmental Protection Agency. James Hansen, the former U.S.
space agency scientist who has been urging policymakers to
combat global warming since the 1980s, said building Keystone
will mean its “game over for the climate.”

‘Uphill Fight’

“The public is beginning to understand that greenhouse gas
emissions are bad for the climate and that there’s a lot that’s
going to be released by mining the tar sands,” Erich Pica,
president of Friends of the Earth in Washington, said in an
interview. “This has always been an uphill fight.”

Refiners say failure to approve the pipeline may actually
increase greenhouse gas emissions. Transportation costs
associated with U.S. imports of crude from the Middle East and
other nations, as well as Canadian exports to Asia, could result
in more emissions, according to the American Fuel &
Petrochemical Manufacturers, a Washington-based group whose
members include Exxon Mobil Corp. of Irving, Texas, and Valero
Energy Corp. of San Antonio.

Environmental groups maintain that concerns over climate
change have always been part of the attack on Keystone XL.

Hurricane Sandy

Recent extreme weather events such as Hurricane Sandy in
October and Obama’s decision to highlight the dangers of climate
change in speeches earlier this year have helped galvanize
opposition, according to Amy Atwood, senior attorney with the
Center for Biological Diversity.

“We’re trying to appeal to a Democratic president who gave
a State of the Union address where he said that climate change
is a big problem,” Atwood said in an interview. “This is the
moment in history where we have a small diminishing chance to
reverse the trend toward catastrophic climate change.”

The State Department hasn’t helped on that score. On March
1, it issued an updated environmental assessment that concluded
the project would have minimal impact on climate change because
the oil would find its way to market with or without the
pipeline.

Longer Route

Approval or denial “is unlikely to have a substantial
impact on the rate of development in the oil sands, or on the
amount of heavy crude oil refined in the Gulf Coast area,”
according to the assessment.

An earlier assessment by the agency, released in 2010,
raised concerns about the Sand Hills. The one released last
month noted the change in the route adds 21 miles to avoid
sensitive areas such as the Sand Hills.

Obama raised the risks to the Nebraska aquifer, which
supplies 80 percent of the state’s drinking water, late in 2011,
months before denying a permit for the project. TransCanada re-submitted its application in 2012 with a new route that avoids
much of the environmentally sensitive Sand Hills region where
groundwater is closer to the surface.

“You had in one sense a states’ issue,” Sharp said. “The
breadth of the coalition opposing has been reduced among the
broad public.”

Residents Opposed

Tackling climate change by curbing the supply of the oil
sands reflects a change in tactics by environmentalists who
spent the first two years of the Obama administration pushing
for a cap on carbon emissions. Those efforts failed and now
groups such as the Sierra Club and Environmental Defense Fund
say it’s unlikely Congress will enact any large-scale climate
legislation soon.

That leaves environmentalists grasping for policies that
would prevent mining or drilling for new fossil fuels. They are
fighting federal leases for coal mines in Wyoming, liquid
natural gas export facilities and the Keystone XL oil pipeline.

Instead of fighting the oil sands, environmentalists should
focus on cutting demand for coal and oil, according to Michael
Levi, a fellow at the Council of Foreign Relations in New York
and author of the forthcoming book The Power Surge.

If demand for oil in the U.S. is cut prices will fall and
companies will be less likely to invest in oil sands, Levi said.

“The oil sands, in a way, should be the consequences, not
cause, of our policy,” he said.